How do you be a successful C-Class and WAR zone landlord?

[Charlie Moore]

Different markets surely require different practices...

How do you manage your c class and urban properties?

[Erik W.]

For starters, we need to fix the title of the post.  "Class C" doesn't mean war zone.  Those who think it does have a very limited understanding of what buying cheap, older properties is all about.  

I invest exclusively in Class C homes currently, although looking to transition into the B-/B arena and MFs.

There are several tools/processes I've found very practical and useful for managing Class C profitably:

1) 3x per year we get INSIDE to inspect our unit.  Change furnace/AC filters at the same time.  Make sure they have a trash cart on premises b/c if they don't I guarantee it's being stored in the garage, basement, attic, etc.

2) During screening, we actually go to where they live currently and look, smell, and listen to how their current home is.  If it's out of town, hire a local starving floor duty agent from any realty company to do it.

3) Zero tolerance on late/partial pays.  In my state there is no required grace period and we aren't required to post a Pay or Quit, so we file on Day 7 past due on ANY balance unpaid without exception.  They can always catch up or go onto a different payment plan to avert an actual eviction, but you cannot listen to or permit their "stories" to steal your income.  Some may be legit, but it really doesn't matter.  Pay and stay. No dough...out you go!

4) Iron clad, simple lease.  Everything spelled out in language a 5th grader can understand.  Get rid of all the "wherewithals, heretofores, and undersigneds"....  If they can't understand it, they won't follow it.  Heck, they don't always abide by the stuff that says: "If TENANT doesn't pay in full, on time, every time, then the LANDLORD may evict."  K.I.S.S.

5) Get rid of features that are expensive to maintain and do not earn you a dime of extra rent.  Carpets, dishwashers, garbage disposals, outside water spigots, landscaping, etc.

6) Make upgrades/repairs using very durable items.  I don't do carpet: vinyl plank, tile, or hardwoods only.  Basically, if you see it on the floor of your local Wal-Mart, it's probably a good choice because they cater to the same crowd and they know what works.  Leverage their knowledge.

7) Hire out the turn overs and the cleaning.  It gets too depressing DIY after a while, and your wife/girlfriend will not be pleased if you expect her to do it (unless she already owns a cleaning business).

At the end of the day, your model is based on cash flow.  Appreciation is minuscule or non-existent.  If you keep all that in mind, you can succeed.